Banks asked to adhere to good corporate governance to avert collapse

Accra – Banks have been asked to adhere strictly to their good corporate governance practices in order to avert their collapse.

They have also been asked to ensure that their laid down credit policies were devoid of favouritism, nepotism and cronyism.

Dr Raziel Obeng-Okon, a Senior Lecturer of the Ghana Institute of Management and Public Administration (GIMPA) noted that to ensure bank sustainability, banks must align their good corporate governance concepts with corporate objectives.

Dr Obeng-Okon, who is also the Executive Chairman, Cidan Investment Group, was speaking at the Chartered Institute of Credit Management (Ghana) 2018 National Credit Management Conference/Induction and Award of Fellows ceremony in Accra.

It was on the theme: The Impact of Corporate Governance on Effective Credit Risk Management in the Finance Sector.

During the ceremony 16 members of the Institute were given certificates as Associate Members, 13 were named as fellows whiles Mr Cudjoe Awudi, Acting Director in charge of Corporate Planning, Monitoring and Evaluation, Forestry Commission was given an honorary award.

Dr Obeng-Okon said it was important for Boards of financial institutions to see it as a duty to abide by sound governance standards by tightening international audit Control systems to flash out fraudulent practices.

The boards of financial Institutions should have formal written down conduct of interest and objectives compliance to implement policies.

The position of board chairman and managing directors or Chief Executives should be separated. No individual should have unfettered powers in decision making process, he stressed.

According to him, some Credit Managers of some financial institution approved loans because some of their customers were their friends and relations, adding that, the interest of banks should go be beyond friendship.

According to him a Bank of Ghana (BoG) Supervisory Report have shown that; some banks and deposit taking institutions lacked good corporate governance structure and what is more worrying is the co-mingling of board members and management responsibilities and that undermine credit and risk management.

According to him, the report further suggested that: some owners of banks and related executives and non executive directors consistently breached related party transaction limit of BoG by extending significant amounts of credits to themselves and relations.

In addition, Dr Obeng-Okon said in some instances, some executives approved fictitious placements with other related and connected companies.

The Executive Chairman of Cidan Investment Group suggested that there should be disclosures and transparency and adherence to strict professional ethics.

The Senior Lecturer was not happy with the lack of effective internal control systems in some banks and noted that such practice sometimes encouraged employee fraud.

He explained that some banks were suffering because of employee fraud and attributed that to the increase sophisticated technology.

These days some bank employees are creating accounts for people and allow strangers to withdraw these monies. Some banks also polish their financial statement nicely and their balance sheets do not reflect the true state of affairs, he noted.

Dr Obeng-Okon appealed to Accountants in the financial sector to report accurately.